The UAE Tax System Enters a New Era: What Federal Law No. 17 of 2025 Means for Businesses and Investors

The evolution of the UAE’s tax framework has followed a clear and deliberate trajectory over the past several years. The country continues to build a financial system aligned with international standards while preserving its core competitive advantages — flexibility, business-friendliness and regulatory predictability. The latest step in this transformation is Federal Law No. 17 of 2025, which amends key provisions of Federal Law No. 28 of 2022 on Tax Procedures and will come into force on 1 January 2026.

At first glance, the reform may seem technical: deadlines, procedures, clarifications. But a closer look reveals something much more significant — the UAE is strengthening two foundational pillars of a modern economy: predictability and transparency. Over the long term, these elements shape investor confidence, financial stability and the attractiveness of the jurisdiction for global companies.

One of the most impactful changes is the introduction of a clearly defined timeframe for requesting the refund of excess tax paid. Companies and individuals will now have five years from the end of the relevant tax period to apply to the Federal Tax Authority (FTA) for a refund or to carry the credit forward. This brings long-awaited certainty, allowing businesses to incorporate potential refunds into long-term financial planning.

The law also accounts for complex or exceptional situations. If a credit balance arises after the standard period has expired, or within the final 90 days of that period, the taxpayer may still submit a request. This reflects the UAE’s characteristic balance between regulatory rigor and practical flexibility—an approach that supports real business processes rather than constraining them.

Another important change concerns the powers of the FTA. The authority may now conduct audits or issue decisions even after the statute of limitations has expired, if a refund request was submitted in the final year of the limitation period. From the government’s perspective, this protects fiscal interests. For businesses, it highlights the need for timely and accurate interaction with the authorities, as well as proper maintenance of tax documentation and financial transparency.

The reform also strengthens legal consistency. The FTA is now empowered to issue binding public clarifications on the application of tax laws to specific transactions. This reduces ambiguity and ensures a unified interpretation of tax rules — particularly valuable for multinational companies or those engaged in cross-border activities. Less uncertainty means fewer errors and greater operational resilience.

A set of transitional provisions accompanies the amendments. Taxpayers whose five-year period to claim a credit refund has already expired, or will expire within one year of the law’s effective date, are granted an additional one-year window to submit their request. Moreover, they may file voluntary disclosures related to their refund claim within two years of submission, provided the FTA has not yet issued a decision. This demonstrates the government’s intention to ensure a smooth and fair transition to the updated regime.

At a macro level, the reform reinforces the UAE’s commitment to global best practices. This includes not only alignment with OECD principles and digitalization of tax administration, but also a broader shift toward a modern fiscal philosophy — one based on clarity, accountability and long-term sustainability. The Ministry of Finance expects the amendments to reduce administrative burdens, strengthen trust in the tax system and enhance the UAE’s competitiveness as a global financial hub.

For businesses, this means the bar for compliance and financial governance is rising. A more mature tax system naturally requires a more structured approach to accounting, reporting and internal processes. The UAE remains one of the world’s most attractive jurisdictions, but operating here increasingly demands precision and strategic planning.

At Garant Business Consultancy, we see these changes not as complications, but as opportunities to build stronger, more resilient corporate structures. Our team helps businesses and investors interpret the new rules, assess risks and develop long-term strategies aligned with the updated tax environment. We support clients across all stages of the tax lifecycle — from structuring and advisory to compliance, reporting and communication with the FTA.

The UAE tax landscape is evolving quickly — but predictably. And that predictability is exactly what allows companies to grow confidently in one of the world’s most forward-looking economies.

If you would like to understand how the new legislation may affect your company or personal tax position, we are ready to provide a tailored consultation: https://garant.ae/en/accounting-services/tax-consultancy